GEMGAZE

June 2020

The dip in the one-year performance of the Diversified Equity Fund category as a whole has created a dent in the performance of Birla Sunlife Frontline Equity Fund. Hence the fund has been shown the exit door and red carpet welcome has been accorded to Axis Bluechip Fund and Mirae Asset Largecap Fund. All the other GEMs from the 2019 GEMGAZE have performed reasonably well through thick and thin and figure prominently in the 2020 GEMGAZE too. 

HDFC Midcap Opportunities Fund Gem

A silent consistent performer over the years, the Rs. 18,455crore HDFC Mid-Cap Opportunities Fund, launched in June 2007, has made its name among consistent performers in the mutual fund arena. This fund is an open ended scheme managed by star fund manager Chirag Setalvad since inception. HDFC Mid-Cap Opportunities Fund earlier had a mandate to invest in a mix of mid-caps and small-cap stocks (92.35% at present). However, the aim now will be to predominantly build a portfolio of mid-cap companies (67.37% at present) that have reasonable growth prospects, sound financial strength, sustainable business models, and acceptable valuation that offer potential for capital appreciation. HDFC Mid-Cap Opportunities Fund holds a well-diversified equity portfolio with the top three sectors, Finance, Chemicals and Healthcare constituting 40.90% of the portfolio. None of the holdings have an exposure of over 5% in the portfolio. Out of the 74 stocks in the portfolio, the top 5 holdings command an allocation of 19%. Over the past five years, HDFC Midcap Opportunities Fund has taken a lead over the benchmark right from the very beginning. The five-year and ten-year returns of the fund are 4.34% and 12.72% as against the category average of 4.25% and 11.25% respectively. In terms of long-term performance, HDFC Opportunities Fund has generated strong returns in the market rallies of the past and has been able to restrict losses in a bear market. Its return since inception is 12.36%. The fund is benchmarked against the NIFTY Midcap 100 TRI. The expense ratio is 1.85% and the turnover ratio is a meager 3.93%. 

ICICI Prudential Bluechip Fund (erstwhile ICICI Prudential Focused Bluechip Fund) Gem

Among mutual fund schemes that have singular focus on large-sized companies, the Rs. 21,821 crore ICICI Prudential Bluechip Fund has distinguished itself by consistently beating its benchmark and peers by a reasonably good margin. The fund has traditionally had a higher-than-category allocation to large caps (88.92% at present). Its mandate earlier called for a concentrated portfolio, with the stock picks drawn from the top 200 stocks by market cap. Post SEBI reclassification, the fund is repositioned as a pure large-cap fund. This will not materially change its risk or return profile, given that the market-cap range is practically the same. The 'focused' approach has been dropped from the mandate. It holds a well-diversified equity portfolio with the top three sectors, Finance, Energy and Technology constituting 54.84% of the portfolio. Out of the 66 stocks in the portfolio, the top 5 holdings command an allocation of 34.35%. This is in any case a positive, given that the fund's burgeoning size made a very compact portfolio difficult. The only limitation to assessing this fund is that despite its consistent show in the last eleven years, it has not seen a serious bear market since inception. In 2011 and in 2015, it managed to contain downside well relative to the market. The fund has been managed by Rajat Chandak since July 2017 and Anish Tawakley since September 2018. In the past ten- and five-year periods, the scheme has delivered 10.34% and 5.98% returns, while the category average has been 8.1% and 5.16% in the same period, respectively.  The expense ratio is 1.92% and the turnover ratio is 13%. Investors looking to invest in an ‘all-weather’ and ‘true to-its-label’ large cap portfolio can consider investing in this scheme. 

DSP Equity Opportunities Fund (erstwhile DSPBR Equity Opportunities Fund) Gem

A very steady performer in the multi-cap category, this Rs. 4,439 crore fund, incorporated in May 2000, is a flexi-cap fund with no pre-defined market capitalisation limits. The fund had a bias towards large caps. But, in recent times, the fund has maintained a 51.49% plus large-cap exposure, with mid-cap stocks at about 43.41%. It holds a well-diversified equity portfolio with the top three sectors, Finance, Energy and Construction constituting 44.3% of the portfolio. Out of the 63 stocks in the portfolio, the top 5 holdings command an allocation of 26.46%.The expense ratio is 1.96% and the turnover ratio is 126%. The fund has been managed by Rohit Singhania since June 2015. In the past ten- and five-year periods, the scheme has delivered 9.73% and 6.77% returns, while the category average, has been 9.12% and 4.93% in the same period, respectively. The scheme has been a consistent outperformer in recent years.

Axis Bluechip Fund Gem

Axis Bluechip Fund has been one of the most consistent diversified equity funds since its inception in January 2010. This fund has generated significant alpha when compared to the category over a decade with a return of 10.58% as against the category average return of 8.08%. Its five-year return is 8.62% as against the category average return of 5.15%. Good performance resulted in assets expanding to over Rs 12,717 crore. With 83.1% of the portfolio in equities, the fund has a bias for large cap growth oriented stocks. Large cap stocks account for 100% of the portfolio value at present. In terms of sector allocation, the portfolio has a bias towards sectors like Finance, Technology and FMCG which comprise about 52.35% of the portfolio value. In terms of company concentration the fund is fairly well diversified, with the top 5 companies, HDFC Bank, Avenue Supermarts, Kotak Mahindra Bank, Infosys and ICICI Bank accounting for only 33.08% of the portfolio value. The fund has around 23 stocks in the portfolio. The expense ratio of the fund is 1.98% and turnover is 99%. The fund has been managed by Shreyash Devalkar, well-known for his deftly managed investment strategy, since November 2016.

Mirae Asset Largecap Fund Gem

Mirae Asset Largecap Fund has been one of the most consistent diversified equity funds since its inception in April 2008. This fund has generated significant alpha when compared to the category over a decade with a return of 11.97% as against the category average return of 8.08%. Its five-year return is 7.64% as against the category average return of 5.15%. Good performance resulted in assets expanding to over Rs 15,347 crore. With 98.2% of the portfolio in equities, the fund has a bias for large cap growth oriented stocks. Large cap stocks account for 83.96% of the portfolio value at present. In terms of sector allocation, the portfolio has a bias towards sectors like Finance, Energy and Technology which comprise about 59.73% of the portfolio value. In terms of company concentration the fund is fairly well diversified, the top 5 companies, HDFC Bank, Reliance Industries, ICICI Bank, Infosys and Tata Consultancy Services account for only 36.19% of the portfolio value. The fund has around 55 stocks in the portfolio. The expense ratio of the fund is 1.67% and turnover is 21%. The fund has been managed by Harshad Borawake since May 2017 and Gaurav Misra since January 2019. But a steady management team manages the fund with style continuity. Mirae Asset Largecap Fund has built a strong reputation as a wealth creator for its investors.